Oil gains as dollar falls, euro zone concerns

Brent crude was 38 cents up at $115.43 a barrel by 1301 GMT, after earlier touching $115.68. U.S. crude was up 98 cents at $101.21, having touched intra day highs of $101.24 earlier.

The euro rose to session highs as European Central Bank council member George Provopoulos said Greece can remain solvent if it sticks to its debt program, adding that the ECB will be flexible on its interest rate path.

Analysts said prices could remain volatile in thin volume ahead of the U.S. Memorial Day holiday, with direction coming from the dollar.

We expect to see low volume today and as long as the currency market stays this volatile this will have an influence in prices, Petromatrix's Olivier Jakob said. A softer dollar makes commodities priced in the currency more attractive to consumers using other currencies.

Analysts expect to see little volume ahead of the three-day Memorial Day weekend, which marks the start of the gasoline-intensive summer driving season in the United States.

U.S. petrol demand also continues to be slack ahead of the summer driving season, which traditionally kicks in over the coming holiday weekend, VTB Capital's Andrey Kruychenkov said.

The Group of Eight leaders sounded a note of caution on prices on Friday, noting that while the global economic recovery was becoming more 'self-sustained', higher commodity prices would hamper further growth.

WEAK U.S. DATA, EURO CONCERN

Recovery worries, together with demand concerns stemming from the euro zone debt crisis and disappointing data from top energy consumer United States kept a lid on oil price gains.

Markets were spooked by the possibility of a Greek default after the head of euro zone finance ministers, Jean-Claude Juncker, said on Thursday the IMF could deny Greece the next tranche of aid.

Weak U.S. economic data overnight also sparked fresh concerns about oil demand. Unexpectedly weak consumer spending hobbled the U.S. economy in the first quarter, with GDP coming in at an annual 1.8 percent which was less than expected, corporate profits shrank and there were fresh signs of a slowdown in the labor market - pointing to an uphill struggle for recovery.

SUPPLY DISRUPTION FEARS

The G8 meeting also focused on the risk of further supply disruptions as conflicts in Yemen and Libya came back to the fore, with Russia joining the growing chorus of countries asking Muammar Gaddafi to go.

The offer to mediate to help Gaddafi to leave Libya -- a change in tone from the Kremlin's previous criticism of Western intervention -- will provide a boost to NATO powers who say they are determined to finish the job they started and end Gaddafi's 41-year rule.

In Yemen, supporters and opponents of president Ali Abdullah Saleh were expected to hold large rival demonstrations on Friday after a week of clashes in the capital threatened to tip the country into civil war.

Violent protests in oil exporter Syria also broke out on Friday with security forces firing at a demonstration protest in the town of Zabadani near the Lebanese border.

(Additional reporting by Francis Kan in Singapore; editing by James Jukwey and Keiron Henderson)